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HOW LOGISTICS FACILITATE AN EFFICIENT 

FREIGHT TRANSPORTATION SYSTEM 

(113–27) 

HEARING 

BEFORE THE

PANEL ON 

21st-CENTURY FREIGHT TRANSPORTATION 

OF THE

COMMITTEE ON 

TRANSPORTATION AND 

INFRASTRUCTURE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

FIRST SESSION 

JUNE 26, 2013 

Printed for the use of the 

Committee on Transportation and Infrastructure 

( 

Available online at: http://www.gpo.gov/fdsys/browse/ 

committee.action?chamber=house&committee=transportation 

(II) 

COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE 

BILL SHUSTER, Pennsylvania, Chairman 

DON YOUNG, Alaska 

THOMAS E. PETRI, Wisconsin 

HOWARD COBLE, North Carolina 

JOHN J. DUNCAN, JR., Tennessee, 

Vice Chair 

JOHN L. MICA, Florida 

FRANK A. LOBIONDO, New Jersey 

GARY G. MILLER, California 

SAM GRAVES, Missouri 

SHELLEY MOORE CAPITO, West Virginia 

CANDICE S. MILLER, Michigan 

DUNCAN HUNTER, California 

ERIC A. ‘‘RICK’’ CRAWFORD, Arkansas 

LOU BARLETTA, Pennsylvania 

BLAKE FARENTHOLD, Texas 

LARRY BUCSHON, Indiana 

BOB GIBBS, Ohio 

PATRICK MEEHAN, Pennsylvania 

RICHARD L. HANNA, New York 

DANIEL WEBSTER, Florida 

STEVE SOUTHERLAND, II, Florida 

JEFF DENHAM, California 

REID J. RIBBLE, Wisconsin 

THOMAS MASSIE, Kentucky 

STEVE DAINES, Montana 

TOM RICE, South Carolina 

MARKWAYNE MULLIN, Oklahoma 

ROGER WILLIAMS, Texas 

TREY RADEL, Florida 

MARK MEADOWS, North Carolina 

SCOTT PERRY, Pennsylvania 

RODNEY DAVIS, Illinois 

MARK SANFORD, South Carolina 

NICK J. RAHALL, II, West Virginia 

PETER A. DEFAZIO, Oregon 

ELEANOR HOLMES NORTON, District of 

Columbia 

JERROLD NADLER, New York 

CORRINE BROWN, Florida 

EDDIE BERNICE JOHNSON, Texas 

ELIJAH E. CUMMINGS, Maryland 

RICK LARSEN, Washington 

MICHAEL E. CAPUANO, Massachusetts 

TIMOTHY H. BISHOP, New York 

MICHAEL H. MICHAUD, Maine 

GRACE F. NAPOLITANO, California 

DANIEL LIPINSKI, Illinois 

TIMOTHY J. WALZ, Minnesota 

STEVE COHEN, Tennessee 

ALBIO SIRES, New Jersey 

DONNA F. EDWARDS, Maryland 

JOHN GARAMENDI, California 

ANDRE ́ CARSON, Indiana 

JANICE HAHN, California 

RICHARD M. NOLAN, Minnesota 

ANN KIRKPATRICK, Arizona 

DINA TITUS, Nevada 

SEAN PATRICK MALONEY, New York 

ELIZABETH H. ESTY, Connecticut 

LOIS FRANKEL, Florida 

CHERI BUSTOS, Illinois 

PANEL ON 21ST-CENTURY FREIGHT TRANSPORTATION

JOHN J. DUNCAN, JR., Tennessee, Chairman 

GARY G. MILLER, California 

ERIC A. ‘‘RICK’’ CRAWFORD, Arkansas 

RICHARD L. HANNA, New York 

DANIEL WEBSTER, Florida 

MARKWAYNE MULLIN, Oklahoma 

JERROLD NADLER, New York 

CORRINE BROWN, Florida 

DANIEL LIPINSKI, Illinois 

ALBIO SIRES, New Jersey 

JANICE HAHN, California 

(III) 

CONTENTS Page 

Summary of Subject Matter .................................................................................... iv 

TESTIMONY 

David Abney, Chief Operating Officer, UPS ......................................................... 4 

Tracy Rosser, Senior Vice President, Transportation, Wal-Mart Stores, Inc. .... 4 

Edward R. Hamberger, President and Chief Executive Officer, Association 

of American Railroads ......................................................................................... 4 

Scott Satterlee, Senior Vice President, C.H. Robinson, on behalf of the Transportation Intermediaries Association ................................................................. 4 

Mark V. DeFabis, President and Chief Executive Officer, Integrated Distribution Services Inc., on behalf of the International Warehouse Logistics Association .................................................................................................................... 4 

Richard H. Fisher, President, Falcon GlobalEdge, on behalf of the 

Airforwarders Association ................................................................................... 4 

PREPARED STATEMENTS SUBMITTED BY WITNESSES 

David Abney ............................................................................................................. 27 

Tracy Rosser ............................................................................................................. 36 

Edward R. Hamberger ............................................................................................ 39 

Scott Satterlee .......................................................................................................... 58 

Mark V. DeFabis ...................................................................................................... 69 

Richard H. Fisher .................................................................................................... 73 

SUBMISSION FOR THE RECORD 

Edward R. Hamberger, President and Chief Executive Officer, Association 

of American Railroads, response to request for information from Hon. John 

J. Duncan, Jr., a Representative in Congress from the State of Tennessee ... 20 

iv 


Insert offset folio 1 here 81677.001
v 


Insert offset folio 2 here 81677.002
vi 


Insert offset folio 3 here 81677.003
vii 


Insert offset folio 4 here 81677.004
(1) 

HOW LOGISTICS FACILITATE AN EFFICIENT 

FREIGHT TRANSPORTATION SYSTEM 

WEDNESDAY, JUNE 26, 2013 

HOUSE OF REPRESENTATIVES, 

PANEL ON 21ST-CENTURY FREIGHT TRANSPORTATION, 

COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE, 

Washington, DC. 

The panel met, pursuant to call, at 1:00 p.m., in Room 2167, Rayburn House Office Building, Hon. John J. Duncan, Jr. (Chairman 

of the panel) presiding. 

Mr. DUNCAN. The panel will come to order. Good afternoon and 

welcome to this hearing of the Panel on 21st-Century Freight 

Transportation. 

Before I begin, I want to let everyone know we are expecting a 

vote series anywhere from 1:45 to 2:30 this afternoon. 

With that, I recognize Mr. Miller. 

Mr. MILLER. Mr. Chairman, I request unanimous consent that 

the chairman be permitted to declare recess during today’s hearing. 

Mr. DUNCAN. Without objection, so ordered. 

Today’s hearing examines the relation between logistics and a 

productive, efficient, and safe freight system. The movement of 

goods across the country may not always grab headlines, but the 

efficiency of freight transportation has a major impact upon the 

lives of every American on a daily basis. From the clothes we wear 

to the cars we drive to the food we eat, the freight transportation 

system impacts all aspects of our everyday lives. 

The logistics industry is valuable to the Nation’s freight system 

because logistics improve the efficiency of the supply chain. The logistics industry adds value to the supply chain by improving the 

planning, implementation, and control of the flow of goods from 

point of origin to point of consumption. 

As I have said before, the purpose of this panel is to provide recommendations to the committee on ways to modernize the freight 

networks and make the United States competitive in the 21st century. We have been given cross-jurisdiction across all the different 

subcommittees, and we are going to try to do our best with that 

opportunity. We have been working hard toward our goal, holding 

multiple hearings and roundtable discussions and visiting critical 

freight facilities in southern California and a few days ago in the 

greater Memphis area. 

We also have before us today an outstanding group of witnesses. 

I am interested to hear from them regarding their operations as 

well as any recommendations they have on ways to improve our 

2 

Nation’s freight system, and we would appreciate their specific recommendations. 

First, we have David Abney, the chief operating officer of UPS. 

UPS is the world’s largest package delivery company, delivering 

over 16 million packages to almost 9 million customers every day. 

Second, we have Tracy Rosser, the senior vice president of transportation at Wal-Mart Stores, Inc. Walmart operates over 4,000 

stores across all 50 States and is a large user of all modes of transportation. 

Third, we have Ed Hamberger, the president and CEO of the Association of American Railroads. AAR represents all of the Class I 

railroads as well as over 170 short line railroads and regional lines. 

Next we have Scott Satterlee, a senior vice president at C.H. 

Robinson, testifying on behalf of the Transportation Intermediaries 

Association, TIA. C.H. Robinson is a leading third-party logistics 

company, and TIA is the professional organization for the thirdparty logistics industry. 

Fifth, we have Mr. Mark DeFabis, president and CEO of IDS. 

Mark is testifying on behalf of the International Warehouse Logistics Association, IWLA. IDS is a warehouse logistics company from 

Indianapolis, Indiana, and IWLA represents warehouse-based logistics companies. 

Finally, we have Richard Fisher, president of Falcon GlobalEdge, 

testifying on behalf of the Airforwarders Association, AFA. And 

Falcon is, of course, a logistics company focusing on air cargo. In 

his capacity as chairman of AFA, he represents 360 similar companies. 

I thank all of our witnesses for joining us today, and I now recognize our ranking member, Mr. Nadler, for his opening statement. 

Mr. NADLER. Thank you, Mr. Chairman. 

Mr. Chairman, thank you for holding this hearing today and for 

your leadership as this panel carries out its work. Through hearings, roundtables, and site visits we have made steady progress in 

spotlighting the challenges facing our freight transportation system. Today we have the opportunity to hear how companies serving 

a variety of critical functions in the movement of goods employ logistics to maximize the efficient movement of freight. What these 

private entities are doing to move commerce is remarkable. Some 

testimony will underscore what is very visible to consumers, such 

as UPS moving 16 million packages throughout the world every 

single day. Other testimony will reveal a largely hidden network of 

third-party forwarders and warehousers and warehouse-based supply chain management. Each of these companies, through innovation and adaptability, ensure that the movement of freight across 

the country does not come to a screeching halt. Advancements in 

logistics have made our Nation’s roadways, railways, waterways, 

and skies realtime warehouses thanks to Just in Time delivery. Yet 

the transportation systems that facilitate freight movements have 

not evolved to meet the changing demands. Logistics and technology can only help companies maximize the efficiency of operating on the existing transportation network, and the bottom line 

is that the existing infrastructure becomes less and less adequate 

to maintain our Nation’s global competitiveness. While freight volumes across the globe are exploding, our international competitors 

3 

are rapidly upgrading their transportation networks to meet the 

needs of the global economy. 

With our Nation’s population expected to exceed 400 million by 

2050 and freight volume is expected to grow by 60 percent in the 

next three decades, future demands on our intermodal freight network will require a bold new vision and approach to addressing 

these challenges. Providing a vision for a 21st-century freight 

transportation system and ensuring that funding is available to upgrade and maintain the infrastructure in which freight moves remains the responsibility of the Federal Government. We must work 

to bridge the gaps that exist in all modes—highway, rail, water, 

and air—between current system capacity and our growing goods 

movement needs. Robust investments across our freight network 

will ensure that shippers and logistics providers will have good 

choices to make among modes. We must also work to specifically 

identify and address freight bottlenecks that cause congestion, slow 

the movement of goods, and come at a cost to our economy. 

We will hear from Mr. Abney today that if every UPS vehicle is 

delayed just 5 minutes each day, it would cost UPS $105 million 

annually. Particularly with respect to surface transportation, we do 

not currently have a reliable way to fund large-scale transportation 

investments whose impacts can be felt regionally and nationally. 

These high-cost projects overwhelm the ability of any State to take 

on and, as a result, most often do not advance. We need a dedicated source of funding outside of the existing State-based system 

to foster and prioritize these investments which are crucial to 

freight movement. 

I am pleased to hear that the witnesses on this panel agree with 

this assessment. Some are willing to go further and recommend 

ways to fund freight movement. I look forward to an active discussion today and at future meetings of this panel not only on investment needs but on revenue options to meet the enormous challenges before us. 

I thank you and I yield back. 

Mr. DUNCAN. Well, thank you very much, Mr. Nadler. 

Does anybody else wish to say anything? Any other statements 

at this time? 

All right. We will go ahead and proceed with the witnesses. I 

think I have chaired about 250 or 300 hearings since I have been 

here. And they have thrown me. They have reversed the order for 

the first time. So we are going to go backwards. I guess it doesn’t 

make any difference. It fooled me though. 

Our first witness will be Mr. David Abney, the chief operating officer of UPS. Mr. Abney. 

4 

TESTIMONY OF DAVID ABNEY, CHIEF OPERATING OFFICER, 

UPS; TRACY ROSSER, SENIOR VICE PRESIDENT, TRANSPORTATION, WAL–MART STORES, INC.; EDWARD R. HAMBERGER, 

PRESIDENT AND CHIEF EXECUTIVE OFFICER, ASSOCIATION 

OF AMERICAN RAILROADS; SCOTT SATTERLEE, SENIOR 

VICE PRESIDENT, C.H. ROBINSON, ON BEHALF OF THE 

TRANSPORTATION INTERMEDIARIES ASSOCIATION; MARK V. 

DEFABIS, PRESIDENT AND CHIEF EXECUTIVE OFFICER, INTEGRATED DISTRIBUTION SERVICES INC., ON BEHALF OF 

THE INTERNATIONAL WAREHOUSE LOGISTICS ASSOCIATION; AND RICHARD H. FISHER, PRESIDENT, FALCON 

GLOBALEDGE, ON BEHALF OF THE AIRFORWARDERS ASSOCIATION 

Mr. ABNEY. Chairman Duncan, Ranking Member Nadler, and 

members of the panel, thank you for the opportunity to testify 

about how UPS utilizes logistics to move freight and the opportunities we see to improve America’s productivity. 

UPS plays an important role in freight transportation. I have 

four slides. If we can show the first slide. And you can just see that 

we have 400,000 UPS employees, many of which are in the United 

States. And we have almost 100,000 commercial vehicles. At any 

given time, the economic value of the goods and services that are 

in the UPS network are equal to 6 percent of the U.S. GDP and 

2 percent of the world’s GDP. 

If you look at slide two, I am just going to give you a quick example of logistics in action. And in this case, we have a supplier in 

Los Angeles, a manufacturer in New York, and a customer in Germany. And I am just going to focus on the transportation mode 

changes. So it goes by truck. And then when it gets to Chicago, to 

our catch hub, it gets shifted into rail. It will move by rail to New 

Jersey. At that point, it will have another mode shift. It goes back 

to truck. And then it gets delivered to the manufacturer where it 

is added and final assembled and then again it goes by truck. And 

then of course it would travel by air to Germany. And then it would 

be delivered. 

This is very common to see these shifts in our modes of transportation. And you know most times things go very well. But as the 

next slide will show, there are some challenges. And when those 

challenges occur, they can delay the movement of goods. And one 

of those is weak intermodal connections. So when you are trying 

to change from one mode to the other. Now a good example of a 

project that is going to correct one of these large ends is the project 

created in Chicago that Congressman Lipinski is involved in. We 

certainly appreciate your efforts there. There is always highway 

congestion in all the urban cities. We all know that. And then the 

air traffic controller delays could be because of many reasons, but 

our antiquated navigational system is one of those. You can see at 

the bottom of the slide that there is real cost to this congestion and 

to these delays. And as was quoted by Ranking Member Nadler, 

every 5-minute delay to every one of our vehicles is $105 million. 

And what it causes us to do is to overstaff and to put more trucks 

on the road than we need to to make up for the congestion. 

The last slide, I just wanted to talk about solutions for a minute. 

And I will highlight the first three. And you can see the others. But 

5 

over the decades, America’s transportation infrastructure has been 

built in silos. So highways were built to connect to highways. Railroads were built to connect with railroads. Congress has tried to 

link them together, but it is still a patchwork. And America needs 

a freight system that is built like a network. And I encourage Congress to take a long-term coordinated view of how the different 

modes can work together. 

For highways, the simplest improvement that we would recommend is to increase the length but not the weight of each trailer 

from 28.5 feet to 33 feet in twin trailer configurations. This would 

allow freight to move more efficiently, reduce the number of trucks 

on the road, and would provide environmental benefits without 

compromising highway safety. Because we are not increasing the 

weight limit, there is no risk of further damage to highways and 

bridges. UPS also supports raising the motor fuels tax and indexing it to inflation. 

The other mode I will mention is air transportation. And we endorse increased funding of the FAA’s next generation air traffic 

control system, and we think those benefits have been well documented. 

So I joined UPS 39 years ago. I could not have imagined the incredible growth and global commerce or could I have imagined the 

role that UPS plays in facilitating America’s economy. But I also 

cannot imagine that nearly four decades later, America’s transportation infrastructure would still be stuck in the 20th century. This 

panel can help modernize infrastructure, build connections between 

different modes, address global barriers to freight movement, can 

move our freight transportation system into the 21st century, 

boosting America’s efficiency, growth, and competitiveness. It is a 

critical mission, and all of us stand ready at UPS to assist you in 

this vital effort. 

Thank you very much. 

Mr. DUNCAN. Thank you very much, Mr. Abney. 

Our next witness is Mr. Tracy Rosser, who is senior vice president of transportation for Wal-Mart Stores, Inc. 

Mr. ROSSER. Chairman Duncan, Ranking Member Nadler, distinguished members of this panel, thank you for the opportunity to 

speak with you today. My name is Tracy Rosser, and I am senior 

vice president of transportation for Wal-Mart Stores, Inc. I am responsible for domestic transportation, our private fleet operations, 

and global transportation. 

Walmart’s logistics network is critical to providing goods to our 

customers throughout the world. The ability to replenish our stores 

and clubs quickly and at low cost has been a key contributor to our 

success. Technology, innovation, and the commitment of our associates continue to drive our mission in providing customers an outstanding shopping experience that saves them money so that they 

can live better. 

Walmart opened its first distribution center in 1970, using a system designed to quickly and efficiently replenish our shelves. 

Walmart logistics employs 77,000 associates at 150 distribution 

centers and 87 transportation offices. We run 6,200 trucks, 55,000 

trailers, and we have 7,500 drivers in our private fleet operations. 

6 

And I would say that our private fleet operations is among the 

safest, with a 1.56 million miles per preventible accident. 

Our fleet drivers log approximately 700 million miles per year, 

with the average truck driver logging more than 100,000 miles a 

year. Our distribution center network typically serves from 90 to 

100 stores and uniquely caters to the needs of specific stores within 

a 200-mile radius of those distribution centers. They move hundreds of thousands of cases each day, and our import facilities provide efficient methods of handling international merchandise. 

Walmart also has nine disaster distribution centers strategically located across the country stocked with relief supplies. 

We have set really ambitious strategic sustainability goals that 

include doubling our fleet efficiency by 2015 with solutions like 

cross-dock consolidations networks, lean routing, reduction of 

empty miles, and optimizing how merchandise gets loaded in our 

trailers. In 2012, we delivered 297 million more cases, driving 11 

million fewer miles than in 2011. We continue to work with the 

trucking industry on a variety of innovative technologies, including 

hybrid and other advanced power trains, alternative fuels, aerodynamics, and advanced tire technologies. For 2012 alone, such reductions helped us avoid emitting 103,000 metric tons of carbon dioxide, the equivalent of taking 20,000 cars off the road. In addition, 

by reducing food miles between farmers and markets, reducing food 

waste and working with farmers to optimize production, we have 

been able to strengthen local economies and create logistical and 

environmental savings. 

With over 4,000 stores in the U.S. and locations in every State, 

Walmart is a user of all modes of transportation, from our ports 

to our rail networks to our highway infrastructure. The transportation infrastructure is an asset to our country, offering a competitive advantage that should be utilized to the fullest. 

Looking ahead, we believe it is important to focus on maintaining 

a system that yields the highest degree of safety, efficiency, and environmental stewardship. We encourage your panel to dedicate attention and funding on areas with the highest priority maintenance 

needs and areas of extreme inefficiency and congestion. Like other 

users, we have noticed that bottlenecks can develop across all 

modes, at points of significant freight movement, as well as in and 

around urban areas. When we find that customers in urban areas 

share a similar demand for goods and services in other areas of the 

country, the logistical costs of meeting those needs can be significant. In addition, as e-commerce grows, customers are demanding 

faster delivery tailored to their schedules. Without a focused effort 

to address timely movement of the freight through urban areas, restrictions and workarounds will continue to add cost, both environmental and economic. Although we pride ourselves on our ability 

to adjust quickly, challenges underscore the need for a national 

freight policy. State and local regulations often share similar goals 

of safety and efficiency, but the variety of measures can be cumbersome and costly to interstate commerce. 

We encourage the development of solutions that address the 

needs of our transportation network in as uniform a manner as 

possible. Maintaining a strong infrastructure will also help our 

suppliers to remain competitive. Walmart recently announced a 

7 

commitment to buy an additional $50 billion in U.S. products over 

the next 10 years. As the economy continues to improve, domestic 

producers will rely on a lean, efficient transportation network to 

get their products to market quickly and cost-effectively. 

To conclude, as a significant user of the Nation’s infrastructure, 

we understand the value of our Nation’s system and of ensuring 

that it remains competitive in the decades to come. We encourage 

the use and development of safe, efficient, and sustainable solutions in freight movement. We also believe that attention and financial resources should be directed towards areas in high needs 

of maintenance, congestion points, and challenges of urbanization. 

Finally, a clear national freight policy can promote interstate 

commerce while meeting safety and efficiency needs and goals. 

Walmart appreciates that this panel has been tasked to consider 

ways to best meet the demands of the Nation’s freight network. 

There is no easy answer here, and we look forward to working with 

you as you address the challenges ahead. 

Thank you again for your time today. I am happy to answer any 

questions. Thank you. 

Mr. DUNCAN. Thank you very much, Mr. Rosser. 

Next is Mr. Edward R. Hamberger, who is the president and 

CEO of the Association of American Railroads. Mr. Hamberger. 

Mr. HAMBERGER. Mr. Chairman, thanks to you and the other 

members of the committee for the opportunity to be here to represent North America’s freight railroads and address this important topic. 

A couple of years ago, Mr. Chairman, we came to the conclusion 

that the story of logistics and freight needed to be told on a wider 

basis. So we went ahead and put together a video. I do have a clip 

I would like to show you today under the theory that a picture is 

worth a thousand words. So this is about a minute and a half of 

what we believe are rail logistics in the supply chain. 

[Video shown.] 

It may not be as catchy as some other logistics videos I have 

seen, but we think it gets the point across. And I hope the point 

that you take away from it is that we see ourselves as an interrelated network. Obviously it was freight rail-centric, but you saw 

a lot of our other modal partners in it. Working together with our 

partners and customers here, we create jobs, grow the economy, 

and keep American products competitive in world markets. 

Let me just get right to the end. How do we keep that going? In 

terms of public policy, we recommend, as my two previous colleagues did, that you continue to focus programs to improve the 

first mile and last mile connections where freight is handed off 

from one mode to another, from truck to rail or rail to truck, at 

intermodal terminals. Improving these connections will lead to 

large increases in efficiency and fluidity throughout the network. 

While we have been reinvesting more private capital than ever 

before, $25 billion this year alone, 40 cents of every revenue dollar 

back into the infrastructure—as you saw, $500 billion in the last 

30 years—sound public policy helps to ensure that these investments continue. So we would say, number one, please keep in place 

the current balanced economic regulatory structure governing our 

industry. 

8 

Number two, please encourage more voluntary—and I emphasize 

voluntary—public-private partnerships for freight rail infrastructure improvement projects. 

Three, please try to improve the environmental and other permitting reviews to make them more efficient, by shortening the time 

it takes for these reviews of freight expansion projects, of course in 

ways that do not adversely affect the quality of those reviews. 

Fourth, we ask that you defer consideration of any truck size and 

weight legislation until the congressionally mandated study from 

MAP–21 is completed next year. 

And five, sort of more of a philosophy, ensure that various freight 

modes pay their own way. That is to say, the ‘‘user pay’’ concept 

has worked very well for developing and growing the infrastructure 

in the country. We believe that the ‘‘user pay’’ concept should continue into the future. 

Thank you for the opportunity to testify and I look forward to answering any questions. 

Mr. DUNCAN. Thank you very much. 

Our next witness is Mr. Scott Satterlee, who is with C.H. Robinson, on behalf of the Transportation Intermediaries Association. 

Mr. SATTERLEE. Chairman Duncan, Ranking Member Nadler, 

and members of the committee, thank you for the opportunity to 

testify at today’s hearing. As one of the Nation’s largest third-party 

logistics providers and a proud member of the Transportation 

Intermediaries Association, C.H. Robinson has a unique view on 

how goods and commerce flow from manufacturer to consumer. My 

name is Scott Satterlee, and I am senior vice president for C.H. 

Robinson. I joined C.H. Robinson in 1991. And I am responsible for 

overseeing the operations of our 175 U.S. branch offices which employ more than 8,400 U.S. employees. 

C.H. Robinson was founded in 1905 and facilitates the movement 

of over 11.5 million shipments a year. We have been named the 

number one 3PL for 2 years in a row by Inbound Logistics magazine. Additionally, C.H. Robinson is a member of the Transportation Intermediaries Association. The TIA is a professional organization of the $162 billion third-party logistics industry. TIA represents over 1,300 member companies most of whom are small family-owned businesses. 

C.H. Robinson relies on all the Nation’s freight capacity to manage our customer shipments on a daily basis. We do not own equipment with wheels. So we are mode-neutral when tendering shipments. We monitor and qualify over 45,000 U.S.-based motor carriers for proper authority, valid insurance, and other data points. 

82 percent of the carriers operate three or fewer trucks, and 98 

percent of the carriers operate 25 or fewer trucks. Many of these 

companies do not have their own dedicated sales force, so companies like C.H. Robinson enhance their sales capabilities. We also 

have access to all Class I railroads for intermodal freight. We operate a series of gateways and consolidation centers for air freight 

and ocean freight and perform customs clearances as a licensed 

customs broker. Some shippers only use our services a handful of 

times when they need assistance finding a truck while other customers have fully integrated our services and even our people into 

their transportation departments. 

9 

So how does freight get assigned and picked up across the country in a regional or long-haul marketplace? We act as a traditional 

freight broker for almost all of our transportation customers. If our 

rates and service levels are competitive, we bring thousands of carriers of all sizes to our customers that normally would never have 

a chance to access their freight due to technology, payment, or contracting requirements. For some customers, we also act as a 4PL 

or shipper’s agent by executing the routing guide. In theory, transportation should be pretty simple. If you have a load you need 

transported, you locate a truck, you assign the truck, and wait for 

the freight to deliver. Unfortunately, many variables make the 

matching of a load with an available truck much more complex 

than that. For example, weather and traffic delays, equipment failures, changing regulation, lane capacity imbalances, business 

seasonality, and economic conditions all add tremendous complexity to the system. In addition, systematic problems, such as 

short lead times and heavy reliance on expedited services, excessive loading and unloading time, poor visibility to inbound or outbound freight, and securing surge capacity during busy seasons 

combine to add inefficiency to the country’s transportation system. 

Property freight brokers and 3PLs like C.H. Robinson mitigate 

these factors that contribute to inefficiency by matching the right 

load to the right piece of equipment at the right time. Finally, we 

offer these recommendations where Government can reduce both 

chronic and unexpected exceptions, therefore increasing efficiency 

in the supply chain. 

One, provide shippers and brokers clarity in which carriers are 

safe to hire in regards to the CSA program. Freight brokers and 

shippers should not need to second-guess the FMCSA on who is authorized to operate on the Nation’s roadways. 

Two, encourage our transportation system to have built-in modal 

flexibility. An example of modal flexibility would be an increase in 

rail ramps across the Nation or a viable shortsea shipping program. 

Three, make sure trucking remains a great opportunity for the 

small- and medium-sized entrepreneurs. They provide the flexibility and service to keep our entire transportation system in equilibrium. Barriers for small carriers include California’s environmental regulations which is significantly different from the rest of 

the country. 

Four, help industry address the growing rise of sophisticated 

cargo theft. Regional cargo theft task forces are under increasing 

budgetary pressures from law enforcement agencies but provide industry and consumers valuable deterrent to a costly problem. 

Lastly, ensure consistency between food safety regulations and 

cargo claims regulations. It is now common for a shipper to request 

the destruction of hundreds of boxes of food without clearly establishing proof of actual damage. 3PLs are often caught in the middle 

of a tension between freight cargo claims responsibility and food 

safety fears. 

We are encouraged and optimistic that the next highway bill can 

and will find ways to improve the Nation’s freight efficiency by addressing some of the noninfrastructure barriers to the efficient flow 

of freight across the country as well. 

10 

Thank you. 

Mr. DUNCAN. Thank you very much. 

Our next witness is Mr. Mark DeFabis, president and CEO of Integrated Distribution Services. Mr. DeFabis. 

Mr. DEFABIS. Chairman Duncan, Ranking Member Nadler, members of the committee, thank you for inviting me to testify today. 

I represent members of the International Warehouse Logistics Association and serve on the organization’s executive committee. 

The IWLA is the only trade association for warehouse-based 

third-party logistics providers. These are companies like mine that 

offer warehouse-based supply chain management services to other 

businesses across North America. 

Independent warehouses are a vital part of the economy. We best 

serve our customers by identifying efficiencies that allow goods and 

materials to move with more velocity from creation to the end consumer while navigating the legislative and regulatory waters that 

affect goods movement. We do all of this while constantly looking 

for ways to achieve efficiencies within the overall supply chain. 

And our success is evidenced by the fact that logistics costs as a 

percentage of GDP have fallen almost in half from 16.2 percent of 

GDP in 1981 to 8.5 percent in 2012. 

Our unique position in the supply chain allows us to understand 

just how goods move across the country and exactly where the system needs to focus to ensure smooth commerce in the future. Today’s commercial freight is multimodal. And the warehouse-based 

3PL is the point at which modal interchange happens. This is one 

reason IWLA members’ facilities are located near every major airport, seaport, harbor, railyard, interstate interchange, and why 

adequate access to these locations is imperative. 

As I mentioned, velocity and security and accuracy within the 

supply chain are mission critical outputs. This is the reason that 

warehouse-based 3PLs provide a growing number of value-added 

services. These warehouses, once only big boxes where goods were 

stored, now may label, package, sort, blend, test, and save customers on transportation costs to speed the process. These same 

warehouses may also support made-to-order operations and handle 

returns processing and refurbishing of returns. 

Warehouse-based 3PLs also play a key role in another growing 

segment of the economy, Internet commerce. This increasing 

amount of e-commerce sales means more shipments are being delivered directly to the consumer. This fact demonstrates that commercial freight does not just move on interstate highways but extends all the way to the residential doorstep. 

This new model, based on value-added services, exposes warehouse-based 3PLs to regulations that previously only applied to 

manufacturers. One distinction between the warehouse and manufacturers is important to keep in mind. Warehouse-based 3PLs do 

not own any of the products that move through our facilities. Ownership of the goods remains with the customer and the relationship 

is that of a bailor and bailee governed by Article VII of the Uniform 

Commercial Code. It seems that this relationship is often not understood or considered during the drafting of Federal rules and regulations. While warehouse operators are prepared to live by rules 

and regulations governing the handling and storage of various 

11 

products, we can only act upon the direction and information supplied by our customer, the bailor. As bailee, we should not be held 

to the same level of liability that applies to the owner of the goods. 

From its unique position in the supply chain, the warehousebased 3PL can see and is directly affected by bottlenecks and choke 

points within the commercial freight network. These often manifest 

themselves at the warehouse where increased costs are incurred to 

keep the supply chain moving in a coordinated fashion. A strong 

logistics industry enables a healthy and growing economy. But a 

strong logistics industry is only possible with freight policies that 

support the needs of the 21st-century supply chain. 

With this in mind, the members of the International Warehouse 

Logistics Association ask the committee to consider the following: 

Develop new approaches to infrastructure financing for all commercial transit modes. These can come via traditional revenue sources 

and through new sources, such as user fees, mileage-based taxes, 

and greater use of private investment. Implement policies to ensure 

that revenue designated for commercial freight projects cannot be 

diverted in the same way that Highway Trust Funds are today. 

Guarantee that fees that are collected on imports at the ports 

through the U.S. Harbor Maintenance Trust Fund are used for 

their intended purpose, dredging and maintaining the Nation’s 

ports and waterways. Also, with expansion of the Panama Canal, 

many ports will need dredging to accommodate the larger ships 

transferring through the canal. 

We have made other recommendations as a part of our written 

testimony, and we would ask your attention to those as well. But 

on behalf of the International Warehouse Logistics Association, I 

thank you for your time. And our industry stands ready to work 

in partnership with the committee on ways to enhance commercial 

freight movement that would result in economic growth for the 

economy. 

Mr. DUNCAN. Thank you very much. 

Next is Mr. Richard Fisher, who is the president of Falcon 

GlobalEdge, for the Airforwarders Association. 

Mr. FISHER. Chairman Duncan, Ranking Member Nadler, and 

members of the committee, thank you for inviting me to testify before the committee today. I also would like to thank Chairman 

Shuster and Ranking Member Rahall for setting up this important 

panel. 

My name is Richard Fisher, and I am president of a forwarding 

company called Falcon GlobalEdge, and I am also chairman of the 

Airforwarders Association. Falcon GlobalEdge is headquartered in 

Boston and operates both domestically and internationally. 

Today I am testifying on behalf of the Airforwarders Association. 

Our association represents 360 member companies, employing tens 

of thousands of employees and contractors. AFA members range 

from small businesses to large companies employing thousands, 

with business models varying from domestic to worldwide operations, with some members operating their own aircraft. In short, 

we are the travel agents for freight. We move cargo throughout the 

supply chain in a time and cost efficient manner regardless of the 

transport mode that is chosen. 

12 

The global economic downturn continues to erode forwarder margins in the face of increasing costs. And these expenses only escalate as the regulatory web expands. For example, in the case of an 

air shipment between Washington and Paris, the timely delivery of 

our customers’ product is dependent on a myriad of U.S. Government agencies and regulations beginning with TSA and CBP. It is 

critical that both FAA and CBP are adequately staffed to manage 

flights and clear shipments quickly and efficiently. When going to 

or from the airport, shipments that move by truck fall under the 

purview of the DOT, and the trucker himself falls under the oversight of FMCSA. Ultimately, one import shipment arriving in the 

United States could meet 13 regulatory agencies at our border, and 

delays can and will result. Sun Tzu once said, ‘‘The line between 

disorder and order lies in logistics.’’ True in war and in forwarding. 

Aviation is a key for many of our members’ businesses. According 

to the International Air Transport Association, air cargo transports 

over $6.4 trillion worth of goods on an annual basis, amounting to 

35 percent of trade by value. 

Allow me at this point to thank the committee for resolving the 

FAA furlough situation and keeping our control towers open and 

operating. As an industry, we are heavily dependent on passenger 

carriers. As an aside, the administration’s proposal to impose billions of dollars in new and higher aviation taxes should be flatly 

rejected. It is in our Nation’s economic interest to have a healthy 

and robust aviation sector, and increasing taxes on airlines runs 

contrary to this goal. Our industry’s operations are immensely complicated by new regulatory burdens. Conversely, the Government 

can assist by continuing to support the modernization of our antiquated air traffic control system by deploying what is called 

NextGen which has been alluded to by my colleagues. The benefits 

of NextGen have demonstrated that the technology can save flight 

time, greatly increase the safety of flight operations, and reduce 

emissions. I urge this committee to maintain its strong support for 

NextGen development. 

AFA members and their customers see the impact of high fuel 

prices every day by paying higher freight rates and higher prices 

at the pump. Still, we also realize that our shipments require good 

roads and bridges to get to and from the airport, and current funding sources are insufficient to maintain this vital infrastructure. 

For example, one in nine bridges in the United States remains 

structurally deficient. Proposed solutions range from increasing the 

Federal gas tax to a vehicle miles traveled tax. Before embracing 

the higher tax, we need assurance that existing taxes are being invested as intended. Given the new hours-of-service regulation that 

will take effect next Monday and requires as many as 40,000 new 

truckers, it is even more critical for the CSA program to better 

work for industry. We need to have surety on who is authorized to 

operate on our Nation’s highways. 

In conclusion, I urge members of the committee to remain vigilant on the promulgation of additional regulations and its impact 

on the freight industry. Thank you for this opportunity. And I will 

be happy to answer any questions you might have. 

Mr. DUNCAN. All right. Thank you very much. 

13 

I apologize, but we do have two votes going on on the floor right 

now. So we will have to be in recess until we conclude those votes. 

Thank you. 

[Recess.] 

Mr. DUNCAN. All right. I am sorry that we got interrupted by 

votes, and then we only had two votes but we had to have an announcement about the women Members’ softball game tonight, so 

obviously, obviously very important business on the floor of the 

House, but we certainly appreciate all the testimony that all of the 

witnesses gave and now we will get into a little discussion. 

Mr. Abney, as you understand, I think, the purpose of this panel 

is to try to coordinate all our different subcommittees and come up 

with a way to always be trying to improve our freight mobility or 

freight transportation system, and you said in your testimony that 

our present system was built in silos and is more a patchwork of 

modes. 

If you could change one thing about how the Federal Government 

addresses our freight system, what would it be? What is the big 

thing that you see for UPS? 

Mr. ABNEY. You know, the big thing for us would be long-term 

planning that would link the intermodal connection. So, those strategic locations in the U.S., whether it be for national importance 

or whether they be regional, but if those intermodal connections 

would be strengthened where we do switch from ocean to ground 

or from ground to rail, and Project CREATE is a good example of 

an area that is focused on that. But right now we just see that 

highways are meant to connect with highways and the railroads to 

railroads, and that would be the area we would like to see the biggest focus on. 

Mr. DUNCAN. Mr. Rosser, you want to take a stab at that? 

Mr. ROSSER. Sure. Thank you, Chairman, for the question. I 

think you are already doing it, frankly. When you think about the 

issues that you are addressing, I think you are nailing it, so studying the problems, continuing research and engagement with the 

private sector like you are doing to understand where the issues 

are, continue to invest in the intermodal network in terms of identifying and finding those areas that add costs. So, our business, we 

are all about helping our customers save money so that they can 

live better, and those issues that Mr. Abney talked about are critical issues that add cost to our customers, and I think solving those 

issues on behalf of those constituents is a really important thing. 

And so I would just add, focusing on those things that improve 

the safety and efficiency of the network in total. 

Mr. DUNCAN. Let me ask you something else I am a little curious 

about. When, oh, I think just about a year after 9/11, the FedEx 

people told me that they had spent about $200 million on security 

measures that they wouldn’t have spent if it hadn’t been for 9/11, 

and it just really boggles my mind how much we have spent on the 

Federal level, the State level, all the local governments, and then 

all that the private companies have spent on security, and now we 

have this huge industry related to security. 

Is that spending, has it leveled off? I guess what I am thinking 

about, is a few months after 9/11, the Wall Street Journal had an 

editorial, and they said they noticed that all the departments and 

14 

agencies were sending up requests for additional money for security and they said, from now on, a wise legislative policy would be 

that anytime the word ‘‘security’’ was mentioned, a wise legislative 

policy would be to give it twice the weight and four times the scrutiny, yet we are not doing that. The Congress votes for anything 

that has the word ‘‘security’’ attached to it. Then I go to these ports 

and I go to all these places and I see all the trucks have to stop 

and go through the machines and all that kind of stuff, and it just 

seems to me we have gone ridiculously overboard on all that stuff. 

But are your companies, or your association, what do you say? 

What do you find in that regard? Are you still having to spend a 

lot of money on security? Anybody? 

Yes, sir, Mr. Abney. 

Mr. ABNEY. Yes, I could answer for UPS, and the answer is that 

it continues to grow, and I wouldn’t tie it to just 9/11. I would tie 

it to all the terrorism activity that has happened throughout, and 

one of the areas that we are really working on and working with 

the Federal Government on is to take a risk-based approach. So 

while we deliver almost 161⁄2 million packages a day, most of those 

packages, we would have no reason to suspect. So with the technology that we have that can put various parameters in and tying 

it into the Federal Government system, we can zero in on those 

areas that are—have the most risk of security, and that would be 

a better use of the dollars and it would allow you to target versus 

this shotgun approach. 

Mr. DUNCAN. Well, I just think it is sad that we are spending 

so much money on all of that. But Mr. Hamberger, in your testimony you mentioned the first mile and last mile connections are 

vulnerable to disruptions. Can you elaborate on that a little bit? 

What are your solutions there? 

Mr. HAMBERGER. Well, I think one of the areas that you probably 

saw when you were out in southern California concerns the transfer points from the ports to a railyard. For example, I know that 

one of our members has been working for 8 years to get an intermodal transfer station sited. We need to focus attention on improving the regulatory permitting review system. That station is going 

to take millions of trucks a year off the road, and they finally got 

their approval this year. And now, of course, they will be in court 

for the next couple of years fending off challenges. But it is that 

transfer point from one mode to another which needs attention. 

Mr. DUNCAN. All right. I have got many more questions, but I 

am going to go now to Mr. Lipinski first. 

Mr. LIPINSKI. Thank you, Mr. Chairman. Thank you for holding 

this hearing on logistics. I appreciate the participation of all the 

witnesses today, and a couple of things that I just want to mention, 

I probably won’t have time for comments on this, but I just want 

to make sure I mention the—I think next year, and was mentioned 

as I think that is very important, that we move forward more 

quickly on that than we have, and also, what Mr. Nadler had mentioned in his opening comments about the importance of having a 

Project of National and Regional Significance, a fund so that we 

can make sure that we get the funding that is needed for some of 

these really, really big projects that are critical to our Nation. 

15 

Mr. Abney, I appreciate your package flow example in your comments about CREATE and how important CREATE is when we are 

out in the ports of Long Beach and L.A. They talked about the importance 2,000 miles away of how important CREATE was to them. 

Your testimony highlights that Illinois is the transportation hub 

of the country. You know, I have the honor of representing Hodgkins, which is home of the UPS Chicago Area Consolidation HUB 

that you reference in your example. The facility employs over 6,000 

people and forwards 1.3 to 11⁄2 billion packages every day. It is also 

located adjacent to the BNSF Chicago Willow Springs intermodal 

facility which opened at the same time as the HUB in 1995. I visited that complex a number of times. I more was impressed not just 

by the logistics used there but also the men and women who work 

there. 

So, that example that you had shown us, Mr. Abney, I had noticed and actually Mr. Nadler had mentioned this to me as he was 

leaving, what impacts the decision about what modes to use, because I noticed it was as you moved by truck from California to 

Chicago and then by rail from Chicago to New York. What influences those decisions? 

Mr. ABNEY. Excellent question, and we have noticed that over 

the years, too, believe me, and you know, we put over 3,000 loads 

or containers a day on the rails. We are one of the largest customers and we have been doing that my entire career at UPS. 

What causes us to put this particular segment on the road is time 

in transit. If we truck it to Chicago, we can cut at least a day’s 

time in transit the way it works with the train schedules, and so 

we look at each of these lanes and where we can place it on the 

rail and maintain the time in transit, we certainly do so. That is 

our first option. Where we can improve time in transit, we have to 

measure the increased cost compared to the customer demand, and 

in this case to be able to reduce the days, time in transit, we put 

it on the road. 

Mr. LIPINSKI. But know you do move by rail also from—out from 

southern California to the Willow Springs CACH, I understand. 

OK. I wanted to ask Mr. Rosser. You had talked about increasing 

your efficiency of your trucks on the road. How did you, as a company, increase the sufficiency of movement? 

Mr. ROSSER. Thank you for the question, Congressman Lipinski. 

So, we had an objective set forth back in 2005 where our CEO challenged us to double our fleet efficiency, our own trucks that we operate by 2015. I am glad to say that we are about 80 percent there 

and still have some work to do. 

Our focus has been on moving the most cases over the fewest 

amount of miles and in the most efficient equipment. So kind of a 

three-pronged approach, and the way we measure our efficiency is 

cases shipped per gallons of fuel burned, is how we measure that. 

I will tell you that in 2011 we delivered 297 million more cases and 

avoided 11 million miles. And I stated earlier, too, compared to 

2007, we moved 658 million more cases, driving 298 million less 

miles, which saved us about $875 million that we were able to pass 

along that savings to our customers. 

If you think about the approach, I will tell you that we are probably a little biased and we think we have the best truck drivers 

16 

in the industry that are working for Wal-Mart Stores, and it starts 

with our people, and our truck drivers are very cognizant of fuel 

economy in our tractors. We work on some of the basics relative to 

fuel economy with engine calibrations, driver training, managing 

our speed, our maintenance programs, things of that nature. We 

are constantly looking with—at advanced technology with our vendor partners, looking at aerodynamics, weight, things of that nature, fuel efficient tires, et cetera. And then the other things that 

we are looking at that are fairly basic is just increasing what we 

are able to put on the trailer. 

We work with our merchants and our suppliers to reduce packaging size, so we are able to move more product in our trailers with 

more efficient packaging. We have used technology with loading 

techniques in managing our loading techniques to get more cases 

per trailer. For us, one additional case per trailer can save us and 

our network about $680,000 over the course of a year just getting 

that one extra case per trailer. 

We look at delivery frequency to our stores, multistop networks. 

We optimize the—utilize technology to reduce our network miles 

driven. Our supplier base is constantly changing. Our ship points 

are constantly changing, and so we have to constantly evaluate 

what the network looks like, and we do so on an ongoing basis to 

reduce miles driven, and so I will tell you that, you know, it is not 

any one thing. It is a recipe of a variety of basic fundamental operations that have allowed us to reach the 80 percent point of our 

goal. 

Mr. LIPINSKI. Thank you. I had another question, but let me just 

throw out if we don’t get another round, I just wanted to—I was 

going to do this for a question for the record, Mr. Fisher and Mr. 

Abney, about the impact of night tower closures at airports because 

I know Midway, in my district, was threatened with that, Ontario 

was also threatened with that, and just interested in the impact, 

if that happened in the future, which is still threatened. But way 

over time now, so I yield back. 

Mr. DUNCAN. All right. Thank you very much. Mr. Webster. 

Mr. WEBSTER. Thank you, Mr. Chairman. I had a question for 

Mr. Hamberger. Are there any Federal laws that are impeding efficient freight transportation? 

Mr. HAMBERGER. I think there are, as I mentioned, environmental permitting regulations that are slowing down the siting. 

Mr. WEBSTER. OK. I will add that to my question, too, Federal 

regulations. 

Mr. HAMBERGER. Slowing down the siting of intermodal yards. I 

mentioned the one in southern California. What I have learned this 

morning is that at the other end of that yard where the railroad 

wanted to move the trailers and the containers across the country 

to Edgerton, Kansas, there was a dry riverbed. That situation led 

to a lawsuit before the State Supreme Court of Kansas challenging 

the Corps granting of a 404 permit to build an intermodal yard 

around that dry riverbed. So those kinds of regulations are something that I know the committee worked on in MAP–21. I know 

you have tried to do it in WRDA. If that moves, we would ask that 

you take a look at some way of streamlining regulations in the rail 

infrastructure building arena as well. 

17 

Mr. WEBSTER. All right. Thank you. 

Mr. Abney, how do you see the emergence of e-commerce affecting the logistics chain? 

Mr. ABNEY. You know, it has had a big effect on our business. 

It at one time, the largest part of our business, is about a little 

more than 50 percent now, was from shipper to another business, 

so B to B. And so we were delivering 50 to 100 packages to a commercial stop. Now we see a lot more B to C, which is going to be 

one, one-and-a-half packages per stop, and it is just a fact of life 

and it is one thing that through our technology has allowed us to 

make changes to where we can address those needs. 

So, now we have an example of that, is UPS My Choice where 

an end consumer that has got a package coming to their house can 

request to have that package redirected, redirected to their office, 

redirected to their neighbor or held for a day until they are going 

to be home. So it is those kind of creative things that we do that 

allow us to adjust to this change. But—and we see it especially 

during Christmastime. You know, the percent of packages that we 

deliver to residential neighborhoods increases greatly and we have 

had to adjust our network to that. 

Mr. WEBSTER. Thank you. Anyone else on that question? 

Mr. DEFABIS. Congressman Webster, I would also say that what 

we—you know, as e-commerce grows, there is a number of services 

that are offered through UPS, FedEx, other parcel carriers, that 

also are these hybrid services that utilize the U.S. Postal Service 

for last-mile delivery for some of these lighter weight packages, and 

I would say that as we look at logistics in total there probably is 

some role that the Postal Service is playing today to facilitate ecommerce for delivery of those lightweight packages that needs to 

be considered as well. And as I said in my comments, the commercial freight now with e-commerce is moving all the way to the doorstep, so we can’t just say that it is moving on the freeways. It is 

really moving into the residential streets, and how are we going to 

efficiently do that. 

Mr. WEBSTER. Thank you. Yes, one more. 

Mr. FISHER. The Airforwarders Association, Mr. Webster, has a 

slightly different view. As it applies to our business, we just recently endorsed IATA’s e-Air Waybill initiative, which is to transmit all information to air carriers in a standardized fashion electronically. We are a paper dependent business and have been for 

years, so we will see in the future all of that information going 

electronically to carriers, which will make us more efficient and 

make the carriage of freight more efficient as we go forward. 

From a personal perspective, in my own company, we have been 

electronic now for several years. We don’t like paper. We have tried 

to get rid of it. All of our communications to our other offices are 

done electronically. There is very little document transfer, so it is 

the wave of the future for logistics to embrace e-commerce in that 

fashion. 

Mr. WEBSTER. Thank you. Thank you, Mr. Chairman. 

Mr. DUNCAN. Thank you very much. I am going to go to Ms. 

Hahn, but I do have to tell you that people used to say that we 

had to go to all the computers to cut down on the paperwork, and 

18 

all it has done is greatly increased the papers that come into our 

offices. 

Ms. Hahn. 

Ms. HAHN. Thank you. I really appreciate everyone coming here 

today and listening to your testimony, and I, too, always want to 

give a shout out to Chairman Shuster and Ranking Member Rahall 

for agreeing to impanel us to, as I understand, the first time come 

up with recommendations for a national freight policy as we move 

forward. So, I know everyone on this panel is listening very intently to your suggestions and your recommendations as we really 

try to come up with a national policy, understanding, fundamentally, how important goods movement is to our economy, to being 

competitive globally, to creating good jobs. So this is really, I think, 

a great moment in our history as we move forward to create one 

that makes a lot of sense. 

And one of the things I was going to ask, and any of you could 

respond. Should we look at doing something really bold like really 

start to talk about opening our ports for off-peak cargo movement? 

I know in 2002, when I traveled to Hong Kong and Singapore and 

saw those ports operating 24 hours a day 7 days a week, I came 

back to Los Angeles and spearheaded what has been sort of an incremental program. It’s called PierPASS and it has been pretty 

successful in moving cargo off peak. It is now 4 nights a week, and 

you know, maybe 1 day on the weekend, maybe not. Wondering 

how that would impact logistics for all of you if you weren’t always 

trying to meet gates that were only open certain hours, and is that 

something we should look at as a policy for all of our ports in the 

country? 

I would like to hear your responses on that. 

Mr. ROSSER. I will take first stab at that. Thank you for the 

question, Congresswoman Hahn. So our customers shop our stores 

24 hours a day. And what we try to do in every decision we make 

is we start with what does the customer want, what do they expect, 

and then we work to solve their need. And as a consequence of our 

customers wanting to shop 24 hours a day, most of our stores are 

open 24 hours a day. 

Ms. HAHN. You know, I will say, Walmart was one of my partners when we were crafting the off-peak cargo movement policy at 

Los Angeles-Long Beach. 

Mr. ROSSER. Yes, and thank you. And our distribution centers 

operate 24 hours a day and our trucks are running 24 hours a day, 

trains are running 24 hours a day, and I would just—I would tell 

you that to the extent that we can fully utilize the assets that the 

country has, you know, we are open to those discussions to have, 

you know, the discussions where we can operate safely and efficiently and fully utilize the great assets that we do have as a country. 

Ms. HAHN. Thank you. Anybody else? 

Mr. FISHER. Yes. Thank you, Congresswoman Hahn. I want to 

congratulate you on the PierPASS program and which you have 

implemented, but I have to tell you I was terrified by it when I 

first saw it, but we have adapted, and I think that knowing that 

ocean transportation is an imperfect science, if many more ports 

had PierPASS programs and more open gate programs, we would 

19 

be much more successful in getting product to our customers. I 

think it is a good idea. 

Ms. HAHN. Well, you know, it was one of the things I thought 

about when I worked on that was, again, I mean, obviously I would 

like to fix every highway, every bridge, widen freeways, more near 

dock, on dock, I would like to do it all, but in the meantime it 

seems like we could utilize our current infrastructure more efficiently, smarter, and it would give a lot of the goods movement industry an opportunity to travel our roads when the commuters are 

also not on the roads. I know that the truck drivers would love to 

not have us on the road with them because they don’t think we 

know how to drive either, so I think it would, you know, really sort 

of move cargo, I think, in a more efficient way. 

The other thing—my time is almost up—you know, I am a big 

believer in spending the money that we are collecting for the purpose for which it was collected, and the harbor maintenance tax 

has been collected year after year after year. We have an $8 billion 

surplus. We are not spending that money for the purpose it was intended, which was to, first of all, dredge our harbors and ports and 

waterways so that we have, you know, efficient movement of cargo. 

So, I am advocating that, I have a bill that would encourage us to 

spend that money and also possibly look at—you talked about the 

last—the first mile and the last mile. I also think it would be something we might look at if ports have already completed their dredging. Is this money that we could use for landside infrastructure and 

improvement? I mean, we worry about cargo being diverted to 

ports in Canada, in Mexico. I have always been told that the number one reason cargo is diverted is not for some new regulation or 

environmental fee that we place on containers, but it is because of 

landside congestion. You-all want that stuff in and out and to the 

destination as quickly as possible. So I would like to hear you give 

an affirmative to Congress, actually, as part of this policy, spending 

the tax for the purpose it was intended in the locations that it matters. Please, please, please nod your heads affirmatively out loud 

for the record. You think that is a good idea that we should? 

Mr. HAMBERGER. Yes. 

Mr. DUNCAN. All right. Well, thank you very much, and we do 

need to do more with that harbor maintenance fund. 

Ms. HAHN. Yeah, we got it. 

Mr. DUNCAN. Mr. Hamberger, you mention in your testimony 

that the railroads are ready to handle the traffic from the expansion of the Panama Canal, and you know, this is my 25th year on 

this committee, and I can remember many years ago when they 

thought a 4,000 TEU ship was a pretty big ship, and then they 

started talking about, they thought an 8,000 TEU ship was huge, 

and now, of course, they are talking about—it is just mind boggling, the ships they are talking about. 

So, everything is in this together. I mean, when we were out in 

California, for instance, Matt Rose told us that his biggest customer now was the Hunt Trucking Company then, and he said a 

few years ago they were 90 percent trucking, 10 percent by rail. He 

said today they are 80 percent by rail, and there are other examples like that that I can give. But are there any particular choke 

points? Are there any places—for instance, all the ports are wantVerDate Aug 31 2005 10:38 Oct 22, 2013 Jkt 000000 PO 00000 Frm 00027 Fmt 6633 Sfmt 6633 P:\HEARINGS\113\PANELO~1\6-26-1~1\81677.TXT JEAN
20 

ing to expand and so forth. Are the railroads set up to handle big 

increases from most of these ports or are there particular places 

where we need to do more? 

Mr. HAMBERGER. Well, of course, it is my job to answer yes, we 

are ready. But in fact it is impossible to predict exactly how the 

opening of the canal will impact traffic. There are so many factors 

that come into play, depending on what is being shipped. Is the 

timeliness of transit the most important thing? Is it the cost? What 

is the fee at the canal going to be? What will the landside facilities 

be? Will the ports be dredged? Which ports will be dredged? So it 

is impossible to predict exactly what the impact will be on the flow 

of commerce. But what I am trying to get across in my testimony 

is that our members are in fact investing with ports. I know in 

Florida, major investment is going on between the State and the 

Florida East Coast Railway. CSX is trying to make sure that the 

port in southern Florida is ready; the east coast carriers are spending money to be able to double-stack their tunnels. Tunnels maybe 

100 years old weren’t designed for double-track or double-stack and 

so a lot of money is going into that. The intermodal yards that are 

being built in the center of the country are BNSF’s investments out 

there and Union Pacific’s investments on the west coast. 

So, we hope we are ready, we think we will be, but it is not 

something that is sneaking up on anybody here. Everybody is trying to be best positioned to handle the flow of commerce wherever 

it does hit. 

Mr. DUNCAN. Well, I guess—and you have covered some of it, but 

what I guess partly of what I was aiming at was like in southern 

California we saw that at the ports most things have to be trucked 

out to where the railroads are, and I am just wondering, are there 

places, the Panama Canal or other places in the country where we 

really need to expand the rail capacity or the lines coming in, anything like that? Are there any particular places where you see that 

we may have a problem in the years ahead? 

Mr. HAMBERGER. Well, let me get back to you for the record on 

that, but just to draw your attention to the fact that again each one 

of these Class I’s has corridors in mind. I would be remiss if I 

didn’t join Mr. Abney in thanking Mr. Lipinski for his leadership 

on the CREATE project. One-third of all railcars originate, terminate, or transit through Chicago, so that is an area we have been 

focused on and we need to get that to conclusion. 

But let me get back with more specifics for you. 

[The information follows:] 

As the committee knows, freight railroads fully maintain 

and develop their transportation infrastructure. As a result, the freight rail industry is among the most capital intensive of any of America’s industries, annually reinvesting about 17 percent of its revenue back into capital 

investments in the rail network. A significant percentage 

of these expenditures is used to expand capacity to handle 

21 

more rail volume more expeditiously. Investments considered each year by the individual freight railroads include: 

• adding new track to existing right-of-way, such as a second 

main line; • adding or extending new sidings on existing right-of-way; • constructing new intermodal or transload facilities; • new, technology-based expansion, such as signaling dark 

territory; • new locomotives that increase the horsepower capacity of 

a railroad’s fleet. 

Railroads evaluate a wide variety of factors in making 

these investment decisions—including present and future 

traffic demands (as determined by railroads working closely with their customers at ports and elsewhere) and the 

expected return on their private invested capital. Our Nation’s freight railroads are in a good position now, and are 

working diligently to be in an even better position in the 

future, to offer the safe, efficient, cost-effective service that 

their customers need no matter where those customers 

are, no matter what the freight is, and no matter where 

the freight is going. America’s freight railroads have reinvested $525 billion (including maintenance expenditures) 

since 1980—including $25.5 billion in 2012—to create a 

freight rail network that is second to none in the world. If 

there is any area where railroads could use assistance in 

developing the infrastructure necessary to support the Nation’s growth, it would be in having the ability to have an 

expedited environmental permitting process particularly as 

we need to add intermodal and other terminal capacity. 

Mr. DUNCAN. OK. All right. Mr. Satterlee, you mentioned the 

need to reduce chronic delays due to congestion. You got into that 

pretty much in your testimony. Are there any ways in which you 

feel we can better allocate or better use our transportation funding 

to go at this congestion problem a little bit better? I mean, we all 

know it is there. Then, too, you mentioned that the typical lead 

time for shipments is only 48 hours. Are there any ways that you 

know of that, you know, that we could work on that or do anything 

to help on that? 

Mr. SATTERLEE. Thank you, Mr. Chairman. Your question is a 

very good one. You know, it is challenging to answer when you 

think about all the different sorts of investments that you could 

make. You know, we think a little bit about congestion. We think 

about the supply chain as a whole. It is really about trying to drive 

as much efficiency and streamlining and simplifying things, you 

know, as necessary. And so, you know, from an infrastructural 

standpoint, you know, ways to be able to create opportunities for 

a more efficient transportation over the road with the asset-based 

players, you know, to be able to get from point A to point B more 

efficiently within the regulatory laws, investments in the road systems, all those sorts of things are, I think, have been discussed and 

are very important. And we think about it from a 3PL standpoint. 

You know, it is really about creating as much flexibility as you posVerDate Aug 31 2005 10:38 Oct 22, 2013 Jkt 000000 PO 00000 Frm 00029 Fmt 6633 Sfmt 6633 P:\HEARINGS\113\PANELO~1\6-26-1~1\81677.TXT JEAN
22 

sibly can to be able to make as efficient and drive out inefficiencies 

by, you know, really decongesting, you know, the flow information 

and the flow of, you know, the transport of the goods themselves. 

And so the—you know, the specific things that would help from 

an infrastructural standpoint, I made a couple of comments, increasing rail ramps and the regulatory laws that may affect or help 

improve things like shortsea shipping programs, kind of like Congresswoman Hahn was referencing, you know, those things help 

speed up the infrastructure and the flow of goods. And so, you 

know, what we see is there is some things that affect both 

infrastructurally and regulatory that we think that the Government can put a little bit more energy in. 

Mr. DUNCAN. All right. Thank you. Mr. DeFabis, tell me about 

your business. All of you, all of the witnesses today know much 

more about their businesses than I do, but I know probably the 

least about your business. And what I am wondering, I am wondering several things, but tell me a little bit about your business. 

Did you see a big downturn 2 or 3 years ago, and is it coming back 

now, and what do you see in the future for the warehouse logistics 

business? 

Mr. DEFABIS. Thank you, Mr. Chairman. Well, in general, I 

think the warehouse logistics industry in the recent recession did 

see a downturn. Our particular business, my company is actually 

in the—80 percent of our revenue is from e-commerce, direct to 

consumer business, and we held up pretty well during that period 

of time and continue to see growth based upon the growth of e-commerce. I think more recently the general industry, warehousebased logistics continues to see good growth because of the increasing reliance of manufacturers and others to outsource their logistics 

needs, and to concentrate all of their time and effort and capital 

on the things that are their core competencies and let someone like 

a warehouse-based 3PL begin to handle the logistics side of it as 

efficiently as possible. And that is why I think you see more activities being done within the warehouse that were traditionally done 

at the manufacturers, whether those be sub-assembly work, refurbishments, repackaging kinds of activities, is that the manufacturers are starting to stick to the knitting, so to speak, and let those 

that are more appropriately placed begin to handle those activities. 

Also, they can save on the transportation cost. Since you have your 

products in a warehouse, don’t move them from there to somewhere 

else to be repackaged, redone, then moved back to a warehouse to 

be delivered to an end customer. Leave them at that point and do 

as much of these value-added services as you possibly can before 

you move them out to the end user. 

But I think the industry continues to be very bright. If you look 

at the amount of Fortune 100 and Fortune 500 companies that 

outsource to 3PLs, that is going to continue to grow over time. 

Mr. DUNCAN. Well, thank you. Mr. Fisher, you mention in your 

testimony, you discuss the negative impact of regulations on timesensitive freight movements, and in another committee on which I 

serve, a few days ago there was an expert who described herself 

as a progressive or liberal Democrat who generally is in favor of 

more regulations, but she said—and I have got the quote here. ‘‘At 

the time each rule is created, it made sense, but over time, the inVerDate Aug 31 2005 10:38 Oct 22, 2013 Jkt 000000 PO 00000 Frm 00030 Fmt 6633 Sfmt 6633 P:\HEARINGS\113\PANELO~1\6-26-1~1\81677.TXT JEAN
23 

creasing of rules and regulations ends up costing us money and 

frustrating the public and destroying jobs.’’ And what I am wondering about, are there any specific regulations that you see as especially burdensome? 

Mr. FISHER. Thank you, Mr. Chairman. My testimony did indicate that we, as an organization, as the Airforwarders Association, 

along with other associations represented here today, are very concerned with FMCSA’s new regulations under the CSA program. As 

you know, hours of service are going into effect on Monday, CSA 

is one of many acronyms that we deal with every day. Stands for 

compliance, safety and accountability, and within the CSA, there is 

a measurement system that is being promulgated called SMS, 

which stands for safety measurement system. We are concerned 

that recent statements by FMCSA stated that is not the case, that 

it is actually a prioritization system and doesn’t have as much to 

do with safety. 

The point is, all of us in industry and our customers need to have 

a clear idea of what Government wants us to do, and there is much 

confusion about the promulgation of this regulation. In fact, there 

are a couple of lawsuits pending against FMCSA on this very subject. So that is just a microscopic version of one of the regulations 

that could add cost, add litigation and slow down the delivery of 

goods to our customers. 

Mr. DUNCAN. All right. Thank you very much. We are going to 

bring this hearing to a conclusion here in just a minute, but let me 

just ask you. One of the big things we are discussing here now or 

about to discuss is the Marketplace Fairness Act, Internet and 

sales tax. In every article you read, everybody says that we are 

going to go more and more with each passing year to doing business over the Internet. Well, each of you or some of you tell us 

what effect you think that will make on your businesses and what 

it means for our freight mobility and for our transportation system. 

Mr. Abney. 

Mr. ABNEY. Well, we certainly see the e-tailers growing their 

business quicker than most of the brick and mortar companies. 

What we are seeing, though, is more and more of our customers 

that do have that brick and mortar are moving to this omni-channel distribution to where they are looking at how they can utilize 

their brick and mortar and be able to compete with some of these 

large e-tailers. 

A good example of that is a retailer with 100 different stores. If 

they do have a customer that wants a product that is not in their 

store, obviously the second choice would be to ship it from distribution into that store and then ask the customer to come back and 

pick it up. Now, what we see them do is they have total visibility 

to their systems and they look at which is the nearest store that 

has that product, and instead of asking the customer to go to that 

store or shipping store to store, they will ship it from that other 

store and then the next day be able to deliver it to the customer’s 

house or their residence. That is a way that they are able to compete more with the large e-tailers. And we are seeing a lot of interest in that area, and we are tailoring products and services around 

that retail part of our business where people can use this omnichannel distribution. 

24 

Mr. DUNCAN. All right. Mr. Rosser, you know, I am a big baseball 

fan, but I have said for a long time that I don’t believe the national 

pastime is baseball. The national pastime is going to Walmart on 

Friday or Saturday night, and I have found out that that is a really 

good place to campaign. You may not realize it. I don’t set up headquarters there, but if I have some free time, I can always go in to 

buy some toothpaste or shaving cream and see a lot of people. Tell 

me how is Walmart—what effect Walmart is going to have if—— 

Mr. ROSSER. First of all, Mr. Chairman, thank you for your business, and we hope you had a great experience at the store, too. I 

will tell you in conjunction with what Mr. Abney said, it is a rapidly growing segment of business just in general, e-commerce network, and in my testimony I stated that we have over 100 distribution centers. Well, what we are finding is exactly what Mr. Abney 

said. We have over 4,000 distribution centers when you think about 

the role of e-commerce in our network to help support our customer 

needs. In the e-commerce channel, generally what you will find is 

that customers expect immediacy in terms of response, and from 

the time they order their product to the time that they want it delivered, but what we are also finding is that customers want a degree of flexibility. There is some items that they do need quickly 

and there is some items that they can actually wait to get, maybe 

a little bit longer than today. But what we are trying to do is come 

up with solutions and a menu that allows us to meet whatever the 

customer’s needs is. And I would just tell you that the solutions are 

out there in terms of delivering from our supplier through our distribution centers to our stores, what we call site-to-store. We have 

options out there for our customers so that we can actually order 

fill from our stores and send product directly to the customer’s 

homes. So there is a variety of different solutions that we are actually testing right now across our entire network. So we are learning each and every day how to meet that customer’s needs and I 

will tell you that we are working with all of our suppliers, our 

transportation partners to understand how we accomplish that mission to solve that equation for the customer. But it is a rapidly 

growing opportunity for the American consumer. 

Mr. DUNCAN. All right. Anybody else? 

Mr. DEFABIS. I would say that the e-commerce segment is probably one of the fastest and most entrepreneurial segments of the 

economy right now. E-commerce entrepreneurs are coming up 

every day and we see them all the time. That is who basically our 

customers are. I think that what is driving e-commerce is convenience for the customer. Some of it is price. It is selection and being 

able to shop over multiple vendors conveniently at home on multiple devices is what is driving that. If you want my personal opinion in terms of any impact that an e-commerce sales tax may have, 

I don’t know that that is a big driver of e-commerce sales one way 

or the other. I think there are other factors that are driving the 

e-commerce economy. 

Mr. DUNCAN. You think that is being somewhat exaggerated, 

huh? 

Mr. Fisher, do you have any suggestions on how we could make 

the TSA or the CBP operations a little more efficient or a little less 

time-consuming? 

25 

Mr. FISHER. Thank you for that question, Mr. Chairman. I have 

been afraid you would ask me that. I can tell you that both of those 

agencies believe in stakeholder involvement, and as an association 

the Airforwarders Association has been the go-to association for 

both TSA and CBP, more recently CBP under different programs, 

but we have found the private-public partnership with TSA to work 

very, very well. CBP historically has been known for their sharing 

of stakeholder information and using stakeholder information to 

develop programs. We are working currently with other organizations on the ACAS program, which is an advanced cargo air screening program, which is combined authority with TSA and CBP, and 

that program is coming along quite nicely. 

I don’t have any really other suggestions as far as those two 

agencies are concerned. 

Mr. DUNCAN. All right. Mr. Lipinski. 

Mr. LIPINSKI. Thank you, Mr. Chairman. I know that we have 

some witnesses who have some time constraints here, so I will just 

be pretty quick here. Projects of National and Regional Significance, which I had mentioned before, do you—I just want to ask 

all of you, do you believe that it is important that we do what we 

did in SAFETEA–LU, have such a program and pay for it out of 

the Highway Trust Fund? MAP–21 had a program for 2013, subject 

to appropriations. There are no appropriations. It is not authorized 

for 2014. But this is a way—there is some major projects in the 

country such as CREATE, but that is not the only one that can 

only be really—we can only really get completed, I believe, with 

large sums of money, and they are not going to go through formula 

funds for the States, they are not going to get it done that way. 

So does anyone have any thoughts on that, the need for such a program? 

Mr. HAMBERGER. Mr. Lipinski, I think you have it spot on. Yes, 

there is a need for such a program. I don’t think you can expect 

a county in southern California to be able to deal with all the commerce coming through L.A.-Long Beach. You can’t expect Cook 

County to deal with all the commerce coming through Chicago. So 

there needs to be Projects of National and Regional Significance. 

Whether or not they are funded in or out of the trust fund is an 

item that can be discussed, but the concept of recognizing that 

there are such projects was an important step forward when Congress did take that step. 

Mr. LIPINSKI. Does anyone else have any thoughts on that? And 

I certainly think it needs to be in the trust fund or else we are subject to the whims of the appropriators who aren’t likely, just like 

we saw in 2013, to—it was zero funded there. 

Just very, very quickly, what I raised earlier, Mr. Fisher, Mr. 

Abney, the effect of if there are nighttime closures of towers, I don’t 

see how we, right now, avoid doing anything but a CR for next 

year, so on October 1st we will once again be faced with, you know, 

FAA is going to have to make cuts, tower closures may again be 

out there. So how would those nighttime tower closures impact 

you? 

Mr. Fisher. 

Mr. FISHER. Well, closures would likely affect UPS more than 

members of the Airforwarders Association, but there would be 

26 

delays for us as well. Any tower closure, regardless of the time of 

day, is going to affect transportation of air cargo, but particularly 

nighttime closures would affect the integrators more than forwarders who are putting their shipments on passenger aircraft, although there would be, obviously, some effect on those passenger 

flights, but our shipments are time critical. We cannot afford any 

delays, and tower closures anywhere would cause us a problem. 

Mr. LIPINSKI. Mr. Abney, you have anything to add to that? 

Mr. ABNEY. I do. For UPS, our biggest area of concern by far was 

Ontario. That is our western United States air hub. We have 27 

operations that come in or out of Ontario between 9:30 at night 

and 7:00 in the morning, and so from the west coast standpoint, 

it is the most important location we have. It was on the original 

list as a midnight closure. The FAA adjusted that list. They took 

Ontario off to our pleasure, but it is something that is an ongoing 

concern that will it come back and be on the list, and that would 

far out shadow any of the other facilities that were on that list as 

far as affecting our customers’ packages. 

Mr. LIPINSKI. Again, I want to thank all of our witnesses, and 

we have a unique opportunity with this panel and under the chairman’s leadership to really, when we come out with our recommendations that we are asked to do in October, to have a major 

impact on reauthorization of MAP–21. We know that there is a lot 

that has to be done, and so I thank you for your testimony here 

today. 

Mr. DUNCAN. Well, thank you very much. I will just close with 

this. 

I just, you know, for many years we had so many countries that 

were just completely underdeveloped. We had many, many other 

countries that were under the thumb of communism or socialism 

and we really didn’t have much competition throughout the world. 

Now, you know, I have traveled all over the world and I remember, been to Vietnam a couple of times, and boy, they are just going 

gangbusters. I mean, you want to start a business over there, you 

just go out and start it, and it is a little bit harder to really let 

the free enterprise system work the way it could in this country, 

but we are going to have to. We have got much more competition 

now from all over the world than we ever had in years past, so we 

have got to do more, we have got to do better, we have got to be 

constantly seeking ways to improve, and we have to do that in all 

areas, but particularly in this area in regard to freight mobility, 

and so that is what we are trying to do with this panel. 

And I appreciate all your testimony, your suggestions. If you 

think of other things that you think we need to know about or take 

a look at, you certainly can submit that to our staff. 

But that will conclude this hearing. Thank you. 

[Whereupon, at 3:00 p.m., the subcommittee was adjourned.] 

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